A home loan is the biggest source of funds people rely on to invest in a house. Buying or building a house requires a significant amount of money. A bank wants to ensure that it gets the money back with interest without any delays. In case the borrower fails to make payments, the bank has to recover the remaining funds by selling the property. If no one buys the property through auction, it becomes an REO asset. The bank has to bear the costs of the maintenance of the property.
This is the reason why loan origination involves a lot of paperwork and documentation to verify the borrower’s ability to make payments. However, document management can be very challenging when done without using a mortgage document management system. Document management without mortgage document management software can be challenging because of the following obstacles:
Time Consuming
Borrowers want fast approval. On the other hand, the lender also wants to speed up the loan origination process but not at the risk of the loan becoming a bad loan. Managing documents manually is too slow and a potential borrower may go to one of the competitors. The lender has to collect and manage documents related to the borrower’s income, income to debt ratio, credit report and so on. Doing this manually can further slow down the process.
Inefficient Document Tracking
Loan origination is a long process with multiple steps. Each step requires and verifies documents for different purposes. Therefore, it is important to keep track of documents. A lender tracking mortgage documents manually is destined to lose track. This can lead to human error which can eventually lead to rejection of a good loan or approval of a bad loan. Keeping track of documents is easy with a mortgage document management system.
Security
Mortgage documents contain sensitive information. These documents tell everything about the financial history and current situation of the borrower. The lender must protect the financial information of the borrower. However, it is very easy to break into a manual system. A mortgage document management provides access to authorized people only.
Multiple Version
It is a big issue that can lead to errors and inconsistencies in documents. Sometimes a borrower provides a document that has some important piece of information missing. The lender requests an updated version of the document with complete information. There can be multiple versions of the same document that are difficult to track without a mortgage document management system.
Accessibility Challenges
There can be accessibility issues with paper-reliant document management. On the other hand, access is password protected in mortgage document management systems. There is no way remotely working employees can access documents if there is no document management system.